Try to envisage a world in which you wake up every morning from your bed, manufactured by Kiwibed, prepare your breakfast of Kiwibread and Kiwicoffee, and put on your clothes – made by Kiwiclothes, no less.

Oh my God, they’ve been leaked a copy of Labour’s manifesto!

This may sound like a nightmare to some, where practically all goods and services are produced by nationalised and monopolised industries, and are shielded from the price-reducing effects of private competition. And yet, this was the reality under Soviet style communism, and not too dissimilar to many major OECD countries up until the early 1980s.

Nationalisation refers to the purchase of privately owned corporations, industries and resources by a government. Often, it occurs with the intention of maintaining wealth-generating assets in public control, preventing labour exploitation and large-scale layoffs, or trying to ensure the fair distribution of income generated by a state’s national resources. Whether this always works in practise is an entirely different question.

In New Zealand, there have been a number of high-profile nationalisations including the purchase of the Bank of New Zealand in 1945 by the Nash government, Tranz Rail in 2001, Air New Zealand in 2003 and the remaining rail network in 2004. Most recently there was the 2008 purchase of the rolling stock and ferries from Toll New Zealand.

Historically and globally, industries that have commonly been subject to nationalisation have been those in the transport, communications, energy, banking, utilities, and natural resources sectors.

Nationalised industries are meant to operate in the public interest. Unfortunately, the consequences of nationalisation have, in practice, often resulted in greater inefficiency, reduced productivity, limited consumer choice, poor service and higher consumer prices. Those who remember the 1980s can probably recall the exorbitant costs of a long-distance call under the state-run model.

Privatisation on the other hand – the opposite of nationalisation – opens a company to private competition, encouraging the offer of better service, more choice and lower prices, all the while realising a decent profit margin. However, not all privatisations are entirely successful on all counts.

A notable case was that of British Rail between 1994 and 1997, which did not reduce ticket prices as predicted, instead creating one of the most expensive train systems in the world. It did, however, result in improved safety, timeliness and increased patronage.

Nationalisation and privatisation will always illicit vigorous public debate on whether one or the other is right or wrong. However, when it comes to where we sleep, what we eat, and what we wear at the very least, we would all much rather have more and better choices at lower, more competitive prices.

To say it with a famous advertising slogan: there are some things that markets can’t do. But, for everything else, there is capitalism.

And we have proposals for KiwiBuild, KiwiPower and no doubt one day KiwiFood!

This entry was posted on Saturday, May 31st, 2014 at 1:00 pm and is filed under NZ Politics.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.

69 Responses to “N is for nationalisation”

The real point is though that SOEs are only a slight variation from nationalised industries and the National Party, which is meant to stand for free enterprise and against socialism/ communism, has in the past vigorously promoted SOEs and been hesitiant to sell them off when they had the opportunity.

What the National Party needs is a leader with the conviction and the oratory power to overcome the scaremongering of the left. Like Nigel Farage for example. Pity the Nats don’t have someone with Farage’s abilities.

In 1945 the Prime Minister and therefore the name given to the administration was Peter Frazer, Nash was the beancounter.
He became a one term PM by defeating Hollands mob in 1957 and was undone by Nordmeyer’s Black Budget in 1958.

“And we have proposals for KiwiBuild, KiwiPower and no doubt one day KiwiFood!” – well the left don’t need to worry about national removing such wasteful companies as the nats seem more than content to keep their bad ideas.

I think it’s hilarious how the NZI have decided to present everything as undeniable fact. Clearly, for nearly 50 years, governments around the world were just insane and everyone was in constant revolt against them.

Or, y’know, nationalized industries provided subsidized vital services that kept the country actually running. And actually worked. Well. And when privatized, especially in terms of transport, ‘private industry’ has almost universally run them into the ground (see the British and New Zealand Rail systems, the french power companies, the Italian water and power companies.)

No worries though, NZI! Imaginary mathematics and economic graphs agree with you, you must be right! Reality is just wrong!

Nationalism/privatisation results in teh lowest common denominator as offshore profit resulting in Kiwi’s becoming tenants in their own land.

Kapiti Coast is a good example. If privatisation is so good with meters why is it Jenny Rowan lost her mayoralty overwhelmingly. She denied water meters were coming whilst council installed the plug ins for them and then later, installed the meters.

Please do so then, Kimble Or lets say, five examples of when privatization has improved welfare.

I said that I could, not that I would. It would be a waste of time as everyone knows it is true. You included.

If the overwhelming majority of privatisations resulted in failures, then the British economy would be completely centrally controlled. And that is ignoring all the other countries which had a fetish for nationalisation of industry,

Yep, everyone who disagrees with you are just lying. Certainly a tactic that’ll boost your confidence. Good for you.

I can’t think of a -single- example where privatizing a nationalized industry has resulted in everyone having improved welfare.

And naturally, we have the ol’ no true free market argument. Wonderful argument for you. Allows you to base everything on ‘facts’ that ‘everyone knows’ but feel no need to cite. Ever looked at a treasury report? Always found it amusing how few citations they make, compared to other ministries.

But you don’t need facts when you’ve got a pretty mathematical theory, do you?

I can’t think of a -single- example where privatizing a nationalized industry has resulted in everyone having improved welfare.

And this is why I called you a fraud. Privatisation isnt about improving absolutely EVERYONE’S welfare. It is about improving OVERALL welfare. You, of course, refuse to consider the issue like an adult. And I have little doubt that this is so you can point to ANYONE losing out from a privatisation and declare MARKET FAILURE!

Oh shit! Privatising industry X has meant that fewer workers are being employed in the industry! Those people are being made worse off, so….. MARKET FAILURE!

And naturally, we have the ol’ no true free market argument.

And reason #2 of why I called you a fraud, is that you called the French economy a free market. Not only that, you said that the failure of a privatised French company was due to it being privatised, with little consideration for the specific circumstances of the failure or the environment it was operating in or demands that it was no doubt saddled with to mollify communists like yourself.

Still no example, bub. See, how -logical- argument works, is you present -evidence- to support your argument, and make logical statements based on that. Ok, so you pick apart my examples of privatization failing by pointing out that other factors in the economy harm it. Fair enough. But that doesn’t give us any reason to believe that any privatizing will work. If you want people to believe or think that privatizing an industry will result in better welfare for ‘everyone’ (and note: People owning the business aren’t everyone) you need to present some evidence.

And yeah, that evidence is full game to be picked over to show all the people who got screwed over by privatization in that instance. Because people still count even if they’re poor.

But that doesn’t give us any reason to believe that any privatizing will work.

But it does torpedo every single example you put up of it not working.

So what have you got left? Nothing, it seems.

You want examples of privatisation working? When you can’t even come up with one of it not?

If you want people to believe or think that privatizing an industry will result in better welfare for ‘everyone’

I just said it wouldnt improve everyone’s welfare. There will be some people who lose out. But if people are generally better off then it is worth it. And that isn’t relying on some people becoming rich and everyone else poor.

Who is better off because of Microsofts products? You will say Bill Gates, but the reality is that the consumers of their products are NECESSARILY better off than the owners of the company.

Oh, but anyone who disagrees with you MUST be greedy and only out for themselves.

I don’t think you’re greedy and only out for yourself. I think you believe in the idea that the ‘from chaos, order’ aspect of the free market is true, based on extrapolation of how you would act if you were a business owner/consumer/worker etc.

And I -have- come up with examples of privatisation not working. The fact that they didn’t work in a not-free-market only means that if we’re in a not-free-market (which, according to your statements, we are) we shouldn’t privatize.

If there are no examples of free markets, you might as well demand that I prove how privatizations don’t work in the universe of star wars. You need to give some evidence to support your notion that privatization will work.

I can understand how a poor starving Russian serf of 1917 could be seduced by the Marxist doctrine but how a supposedly educated, computer literate fellow can describe him/herself as ObligatoryMarxist has me fucked really!

If there are no examples of free markets, you might as well demand that I prove how privatizations don’t work in the universe of star wars.

No. You just need to show an example of the failure, as well as the REASONS for the failure so that people can see how it was privatisation that caused the failure and not other (non-free market related) circumstances.

If every privatised business that failed, only failed because of non-free market influences, then you cant blame the free market. In fact, you would have to say a freer market is the solution.

So lets see if you can do this. Provide an example of a privatised failure and include the reasons why it failed, and then say how these were “free-market” reasons.

Microsoft’s popularity is mostly based on their manipulation of vendors to create a pseudo-monopoly. Since everyone else has Microsoft, I have to use Microsoft, and as long as it is in my budget, I will pay for it. Even if I think it’s highly overpriced. It’s hardly a cold, rational and objective evaluation of the quality/utility of the product. Ergo, I am not gaining the level of welfare I am paying for. From the back of that, ‘Bill Gates’ gets millions upon millions of dollars and lives a life more luxurious than I, or anyone else I know, could ever possibly expect.

Ergo, Bill Gates has gained far more welfare from microsoft products than the consumers who buy it.

Now yes. That is a choice. Nobody is pointing a gun to my head and forcing me to use/buy their products. However, Microsoft have exercised power that I do not have in order to put me into a situation where the choice is not about the utility of the product, or the welfare it grants me.

Microsoft is not a government. There is a key difference there. Now I would hazard a guess, and please do correct me if I am wrong, that you would say Microsoft can be brought to heel by market forces, while a government in the same position cannot. I agree with the second part. Government in it’s current form is not tightly controlled by the electorate enough to run an economy in that way. Just look at ‘communist’ china. However, I disagree with the idea that Microsoft can be brought down by market forces.

JB- I read the first five sentences of OM at 2:46 and every one of them is delusional nonsense. I stopped reading after that,and it amazes me that people have the patience to deal with lunatics who don’t have the faintest grasp on reality. The real problem is they have the vote.

Ah, but if I buy linux, then I am cut out of vast amounts of the economy which are geared towards Microsoft. Can’t bring/use my linux laptop in a company that exclusively uses Microsoft. Can’t play video games built for Microsoft if I only use Linux. Can’t use Linux if doing so voids the warranty on my computer.

(I do have a Linux laptop though. Can’t use it for much, but it’s an itty bitty little netbook, so wasn’t using it for anything much anyway).

Ergo, Bill Gates has gained far more welfare from microsoft products than the consumers who buy it.

Look at how contrived your line of argument is. And at every point there are dozens of counter arguments that you flat out ignore or assume away.

You are simply incapable of seeing how flimsy your position is.

People are buying microsoft products despite it making them worse off? Why would they?

Buying it because everyone else is using it or products you want to use require it DOES make you better off. The value you get out of it is in excess to the cost. Regardless of where that value comes from.

Long distance calls did remain costly after privatisation of telecom, they stayed high until a second operator was able to compete in the home phone market and therefore national and international toll calks.

The thing proven here is that a state monopoly and a private monopoly acted exactly the same in their own best interests. Somehow people remain stupid enough to think that their choice of government will be benevolent and look after them before it looks after itself. These same people are stupid enough to empower their team with powerful levers over their lives seemingly incapable of recognising it’s probably only 3-9 years before these powerful levers are handy to their ‘nasty party’.

I prefer the state running infrastructure that the people can use to their benefit, such as power, electricity, roading, main trunk rail, and other infrastructure whose operation is essential to state security. On the other hand, in the provision of consumer goods and services is better left to the innovative private sector.

Gee, that was a bit simplistic!

I recognize that the best system fosters competition and promotes the most efficient use of resources. (That’s the theory; how you actually achieve it is the trick.) You have to deal with human factors such as unfair/unethical business practices, “too big to fail” mentality, price-fixing, corruption, etc.

I also encourage a system in which the private sector, if it’s up to it, can run previously state-run enterprises more efficiently and sustainably. I think a lot of New Zealanders have trouble with the notion of private prisons and private schools, but if they can achieve better outcomes than the state institutions, then lets have more of them (and yes, we can have great debates over how you measure the outcomes).

When I was a little chap I can remember popping into Evans’s in Cuba Street where a hugely fat man in a striped waistcoat and tie would reel out on the bench the cloth that my mother had selected and slide his very sharp scissors through it without even cutting it. Amazed was I. Then he rang up the amount on a huge sliver embossed till that made Arkwrights the grocers look like shit. Such is progress folks!

James Smiths was best. When you bought something they’d put the money and the docket into a little capsule and pull a cord and it would flick across on a cable to the cashier in the little office who did the book work and then she’d flick it back across on the same cable with the receipt.

State owned organisations run best when the consumer is compelled to use them which usually happens as it did with the railways of old where it was illegal to use any other form of transport if freighting goods for more than 7 miles in roughly the same direction. Even then they were racking up huge losses requiring massive amounts of tax payers money to bail them out every year. We had exactly the same situation with Telecom where they had 36000 staff and it took 4 months to get your phone connected. Now they have 6000 staff plus a whole cell phone division, as well as being an ISP provider.

Privately owned companies run best when there is competition and a strong Commerce Commission to monitor that.

Well, yeah, that’s the question. It doesn’t really explanation nationalisation for a lay audience, and it doesn’t approach the subject with the kind of intellectual rigour you’d expect for an audience that knew what nationalisation was. I guess it’s written as propaganda, in the sense that the ignorant may come away from it with a general impression that nationalisation sounds like a bad thing.

nd its a fucking typo.

No it’s not. There/their is a typo, as is the/teh. Writing illicit for elicit is ignorance, not carelessness.

Its one thing to identify delusion, its another to use alleged insanity to throw people who don’t believe in communism into gulags as your predecessors did you sad commie moron.

Yes. Not just the Gulag. It is instructional for the socialists to remember that when the Marxists took over each East European country after WW2, the first ones against the wall were the socialists and local non-Moscow aligned communists.

That’s when a Government is bailing out a bank, an institution, any company, instead of just virtual write-offs as in the case of some financial companies, taking a controlling equity stake in return for the cash can be a better course, provided the Government quits when it can get its money out with some compensatory interest.

This minimises the problem of moral hazard created by bailouts.

I’m not sure of the circumstances of the 1945 takeover of the BNZ, but the State has bailed this bank out three times in its history. When the State has to bail out a big private institution in the interests of national economic stability, it seems to me that taking an equity stake is better than than saving sub-standard management and dozing shareholders by giving guarantees or State loans.